Chapter 23-: Organisation Structure and Employees
Chapter 23-: Organisation Structure and Employees
Chapter 23-: Organisation Structure and Employees
Formal organisation
Its the internal structure of a business as
shown by organisation chart
It normally shows the following:
How the business is split into functions or
departments
The roles of employees and their job titles
Who has responsibility
To whom people are accountable
Communication channels Hierarchy
The relationship between different positions in order or levels of responsibility in an
the business. organisation from the lowest to the
highest.
Employees and responsibilities
Directors: Operatives:
They are appointed by the owners Operatives are skilled workers
to run the business They are involved in the
They make all important decisions production process.
in the business. They are accountable to
They also have authority over the supervisors or managers.
managers in the layer below. They have more status than
Managers: general staff because they are often
They are responsible for planning, skilled.
controlling, organising, motivating, General staff:
problem solving and decision Businesses often employ staff that
making. do not have any specific skills
They are also leaders and help to However, with training they can
guide and shape the business. perform a variety of tasks and gain
Supervisors: promotion to other position.
Supervsors monitor the work in Professional staff
their particular area. They are skilled and highly trained
They have authority over e.g.lawyers, accountants & doctors.
operatives and general workers. In palces where lots of
professionals are employed,
organisation charts may be
different.
Features of organisatioal
structures
1. Chain of command 2. Span Of Control
It is the route through which orders are The numbers of subordinates a person is
passed down in the hierarchy. directly responsible for
Note Note
Orders will pass down through the layers from Narrow span of control: allow for closer
the top to bottom supervision, more layers in hierarchy may
Information may also flow back from the be required, helps more effective
bottom to the top communication
If the chain of command is long: Wide span of control: gives subordinates
Messages may get lost or confused as they more independence, more appropriate if
pass up and down the chain. labour costs are significant, reduce number
Changes might not be accepted lower down of managers
the chain. Factors affecting span of control:
experience and personality of manager
nature of business
skills and attitudes of employees
tradition and culture of organisation
Features of organisatioal 4. Hierarchical(Tall) Structures
A tall structure means there are more layers in
structures
hierarchy.
4. Flat Structures Note:
A flat structure means there are a The chain of command is long and span of
fewer layers in hierarchy. control is narrower.
Note: Implications
The chain of command is short but Communication through the whole structure can
the span of control is wide. be poor because there is a long chain of command.
Implications Management costs will be higher.
Communication is better because There may be a clear route for promotion that
chain of command is short. might help to motivate staff.
Management costs are lower because Staff control tends to be more formal and less
there are fewer layers of management. friendly because of all the layers in the hierarchy.
Control may be frendly and less
formal because there is more direct
contact between layers.
Features of organisatioal
structures
5. Delegation Key point
Authority to pass down work from One change in recent years has
superior to surbodinate. been a switch to flatter structures. This
Postive effect has helped to cut managerial costs.
Sometimes delegation can motivate It has also given more responsibility
workers because they feel as though to other workers, which may help to
they being trusted to carry more difficult motivate them.
work
Negative effect
However, if employees think that
'extra' work is being given to them
without any reward, they may be
dissatisfied.
Note:
To extent to which delegation takes
place will often depend on whether
decision making is centralised or
decentralised.
Page 79
Questions: Discuss the strengths and weaknesses
of delegating all responsibility to the manager
(5)
Ronald and Jazwinder give the appointed manager authority to
do work. The manager might think that 'extra' work is being
given to him/her without any reward, he/she may be
dissatisfied. The manager may not organise the coffee shop in
the manner that they want. This may lead losing the customers.
But by appointing the manager to take control of the shop will
help them cope with increasing number of customers and this
means the workload of Ronald and Jazwinder reduce giving
them more time to do other work such as finances of the
business.
Decentralised
De/Centralisation Type of organisation system
where decisions making is pushed
Centralised down the chain of command and
Type of organisation system where most away from the top.
decisions are made at the top of the organisation Advantages
and then passed down the chain of command. Workers have autonomy and may be
Advantages better motivated.
Senior management has complete control over It speeds up decision making
resources. It takes pressure off senior managers
Senior managers are trained and experienced in by reducing their workload.
decision making. Workers get the opportunity to be
It prevents parts of the business e.g. creative and share their ideas.
departments acting independently. It provides more promotion
Coordination and control is easier. opportunities at the different managerial
Disadvantages levels.
Employees may be demotivated without any Disadvantages
authority. Senior managers may lose control of
it brings less creativity and fewer ideas resources.
Procedures may be needed to make decision Costs may be higher owing to less
making easier. standardisation and more variability in
People at the top may be out of touch with the decision-making process.
needs of customers served by more local Some employees may not have the
employees. ability to make decisions.
Organisation chart and
Growth
As businesses grow, the formal organisation is likely to change:
Most businesses, because they start small, have an entrepreneurial structure. This means
that decisions are made centrally-by the owner or key workers.
As a business grow, they may introduce a traditional structure. This is where the structure
is based on a hierarchy and decision making is shared throughout the business.
In some business, a matrix structure is favoured. This is where employers are put into
teams that cut across departmental roles. They may work together on a specific project-
designing a new product.
Past paper questions